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TMI Blog2018 (9) TMI 1891X X X X Extracts X X X X X X X X Extracts X X X X ..... om gross income of the trust Carry forward of income or loss of charitable trust - HELD THAT:- Allowing any expenditure of the earlier year which has been brought forward and set off in the year under consideration, is a justified finding of fact based on the correct interpretation of law and the judgment relied upon by it rendered by the cognate Bench. Therefore, the same does not call for interference. A similar view was also taken by the Division Bench of the Bombay High Court in CIT v. Institute of Banking [ 2003 (7) TMI 52 - BOMBAY HIGH COURT] wherein held that the income derived from the trust property has also got to be computed on commercial principles and if commercial principles are applied, then adjustment of expenses incurred by the trust for charitable and religious purposes in the earlier years against the income earned by the trust in the subsequent year will have to be regarded as application of income of the trust for charitable and religious purposes in the subsequent year. - I. T. A. Nos. 106 and 107 of 2016. - - - Dated:- 27-9-2018 - Dinesh Maheshwari C. J. And S. G. Pandit J. For the Appellant : Jeevan J. Neeralgi , Advocate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of Income-tax (Appeals), Mysore (hereinafter referred to as the appellate authority for short) in I. T. A. No. 267/Trust/ CIT(A) V/10-11 and I. T. A. No. 838/Trust/CIT(A) V/11-12, contending that under section 11(1) of the Act, depreciation is allowable as application of income. Further relying upon the Finance (No. 2) Act, 2014, it was contended in the appeals that sub-section (6) was inserted to section 11 of the Act, wherein from the assessment year 2015-16, the depreciation cannot be claimed as an application of income under section 11 of the Act, in case, if the same was claimed in the earlier years. Moreover, specifically for assessment year 2009-10, the respondent-trust contended before the appellate authority that it is entitled to claim accumulation of income under section 11(2) of the Act as made in Form No. 10. The appellate authority, on consideration of the appeals, passed two separate orders dated October 15, 2014 and December 15, 2014, and held that the respondent-trust is entitled for the benefit of depreciation and allowed the claim of the respondent-trust for accumulation of surplus income under section 11(2) of the Act. 5. Aggrieved by the af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income under section 11(2) of the Act stand settled by the decision of the hon'ble Supreme Court reported in CIT v. Rajasthan and Gujarati Charitable Foundation [2018] 402 ITR 441 (SC) and the decision of this court in I. T. A. No. 551 of 2017 decided on August 14, 2018 (Principal CIT (Exemptions) v. Manipal Academy of Higher Education [2019] 415 ITR 361 (Karn). 9. In so far as depreciation allowable to a trust, the hon'ble Supreme Court in the decision cited supra, considered the question as to Whether on the facts and in the circumstances of the case and in law, the Income-tax Appellate Tribunal is justified in holding that the depreciation in respect of cost of the assets allowed to the assessee as expenditure is allowable as it gives rise to double deduction though such deduction is not specifically provided in the Income-tax Act, 1961 ; and while answering the said question of law, held as follows (page 445 of 402 ITR) : These are the petitions and appeals filed by the Income-tax Department against the orders passed by various High Courts grant ing benefit of depreciation on the assets acquired by the respondents-assessees. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e court for determination was : whether depreciation could be denied to the assessee, as expenditure on acquisition of the assets had been treated as application of income in the year of acqui sition ? It was held by the Bombay High Court that section 11 of the Income-tax Act makes a provision in respect of computation of income of the trust from property held for charitable or religious pur poses and it also provides for application and accumulation of income. On the other hand, section 28 of the Income-tax Act deals with chargeability of income from profits and gains of business and section 29 provides that income from profits and gains of business shall be computed in accordance with section 30 to section 43C. That, section 32(1) of the Act provides for depreciation in respect of build ing, plant and machinery owned by the assessee and used for busi ness purposes. It further provides for deduction subject to section 34. In that matter also, a similar argument, as in the present case, was advanced on behalf of the Revenue, namely, that depreciation can be allowed as deduction only under section 32 of the Income-tax Act and not under general principles. The court rejected this arg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en into account. This view of the Tribunal has been confirmed by the Bombay High Court in the above judgment. Hence, question No. 2 is covered by the decision of the Bombay High Court in the above judgment. Consequently, question No. 2 is answered in the affirmative, i.e., in favour of the assessee and against the Depart ment.' After hearing the learned counsel for the parties, we are of the opinion that the aforesaid view taken by the Bombay High Court cor rectly states the principles of law and there is no need to interfere with the same. 10. The aforesaid decision of the hon'ble Supreme Court has been followed by this court in I. T. A. No. 551 of 2017 decided on August 14, 2018 (Pr. CIT v. Manipal Academy of Higher Education [2019] 415 ITR 361 (Karn). Thus, when the issue regarding the claim of depreciation in the hands of the trust registered under section 12A of the Act is no more res integra, no substantial question of law in this regard would arise in these appeals. 11. In so far as question of carry forward of income or loss of charitable trust, this court, in I. T. A. No. 551 of 2017 disposed of on August 14, 2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the purposes of the trust or other wise. It should be noted, in this connection, that the amounts so added back will become chargeable to tax under section 11(3) to the extent that they represent outgoings for purposes other than those of the trust. The amounts spent or applied for the purposes of the trust from out of the income computed in the aforesaid manner, should be not less than 75 per cent. of the latter, if the trust is to get the full benefit of the exemption under section 11(1). In CIT v. Trustee of H. E. H. the Nizam's Supplemental Religious Endowment Trust [1981] 127 ITR 378 (AP), the Andhra Pradesh High Court has accepted the accounts maintained in respect of the trust in conformity with the principles of accountancy for the purposes of determining the income derived from the property held in trust.' In view of the aforesaid findings of the learned Tribunal, allowing any expenditure of the earlier year which has been brought forward and set off in the year under consideration, is a justified finding of fact based on the correct interpretation of law and the judgment relied upon by it rendered by the cognate Bench. Therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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